Global poultry markets bullish, but disease and geopolitical risks loom

Lower feed costs and high prices for competing proteins are making poultry products increasingly attractive to consumers worldwide. The analysts have raised their forecast for global poultry market growth this year from 2.5% to 3%, spurred by recoveries in key markets such as China, the EU, India, Pakistan, and Southeast Asia.

Strong retail demand and a rebound in foodservice consumption are also expected to support growth.

However, the report highlights two major uncertainties: animal diseases and geopolitical tensions. "Both can significantly disrupt global trade flows at any time," warned Nan-Dirk Mulder, senior analyst for animal protein at RaboResearch.

Current tensions in the Middle East, for example, have led to the rerouting of trade via South Africa, which is increasing transport times and costs between Asia and Europe.

Disease risks​

A recent outbreak of Newcastle disease on a farm in Rio Grande do Sul, Brazil, led to export bans from several major importers, including Japan, China, Saudi Arabia, and South Africa. While restrictions vary by region, and no further cases have been reported, the incident has raised concerns for both Brazil and its trading partners.

Meanwhile, avian influenza continues to pose a challenge, though the situation has improved slightly compared to last year.

The EU has reported its lowest number of outbreaks since 2019, and South Africa has remained free from commercial farming outbreaks, with chicken production fully recovered.

However, the US has experienced ongoing avian influenza outbreaks, particularly affecting its egg industry. With the approach of winter in the Northern Hemisphere, the risk of further outbreaks is expected to rise.

Feed price decline​

RaboResearch predicts further declines in feed costs, particularly for grains and oilseeds like soybeans and corn. Prices dropped significantly in the second and third quarters due to stronger-than-expected harvests in the Northern Hemisphere, a strong US dollar, and promising Russian wheat yields.

While US corn and soybean supplies are improving, risks remain due to uneven rainfall in the Black Sea region and the potential impact of La Niña on upcoming harvests. Although compound feed prices are expected to drop slightly, significant regional differences could arise depending on weather conditions.

Supply chain pressures​

Global chicken grandparent stock remains tight, and hatcheries in several countries are facing technical performance issues, leading to slower supply growth in regions like Latin America, Africa, and Asia.

Higher prices for day-old chicks (DOC) are also contributing to this trend.

Profitability and trade outlook​

Despite these challenges, most poultry industries worldwide remain relatively profitable, with prices rising in many markets. The exceptions are China and Japan, which are grappling with local oversupply, falling prices, and rising stockpiles. Slower production growth, weaker economic conditions, and lower consumer confidence are driving this oversupply, leading to a sharp decline in chicken imports to both countries during the first half of 2024.

Nevertheless, global poultry trade is expected to remain strong through the second half of 2024, as demand for chicken imports increases in many markets. Consumption in developed economies like Europe, the US, and Japan is projected to continue its upward trajectory, supported by the long-term trend of affordability. Demand for value-added products, such as processed and specialty poultry, is also expected to recover further.